Former Treasury Sec. Larry Summers, a Democrat, says that the nation’s too-high inflation might lead to Donald Trump getting reelected to the White House.
Summers, who was the treasury secretary in the Bill Clinton White House and director of the National Economic Council under Obama, is a stalwart critic of the Federal Reserve’s and the Joe Biden White House’s handling of inflation and said in a Washington Post article that the government needs to reevaluate the threat of higher prices.
“After years of pushing for expansionary monetary and fiscal policy, I changed my view this past winter, and I think the Biden White House and the Federal Reserve must change their thinking on inflation too,” he said.
“High inflation and a sense of it not being controlled helped get Ronald Reagan and Richard Nixon elected, and risks allowing Donald Trump to come back to power,” he warned Democrats.
Summers used what Fed Chairman Jerome Powell said in August to prove his point. He rebutted five points that Powell used to argue that inflation is simply transitory and will come back down.
The former treasury sec. rebutted the idea that inflation was only being seen in a few sectors of the economy and Powell’s August statement that there was “little evidence of wage increases that could threaten greater inflation.”
Summers highlighted that around 4.4 million workers left their jobs in Sept., around 100,000 more than one month previous — a record high number since the U.S. started keeping records around two decades ago.
He added that the central bank’s inflation anticipations have notably gone up since Powell’s yearly speech in Wyoming.
Summers said that lowering tariffs “is the most crucial supply-side policy the White House can have to fight inflation” and that the Fed should push the tapering of its asset buys. The central bank said recently that it will start winding down its huge monthly purchases of bonds later on this month.
Summers also asked President Biden to appoint Fed officials who recognize the dangers of inflation to the economy and will see rising prices as the serious problem that they are.
Inflation just reached its highest number in 30 years, going to a whopping 6.2% for the fiscal year ending in October.
Author: Steven Sinclaire